Despite beer and lobby ties, Speaker Dennis Bonnen sees no need for recusals or new disclosures

Bonnen, who married into a beer distributing family, says he doesn't need to recuse himself on alcohol issues and won't name the lobbyists who own a piece of his bank — a list that is much longer than previously reported.

The 86th Legislature runs from Jan. 8 to May 27. From the state budget to health care to education policy — and the politics behind it all — we focus on what Texans need to know about the biennial legislative session.

When Republican state Rep. Dennis Bonnen was looking to raise money for his bank a decade ago, he turned to familiar faces for some of the investment capital: lobbyists who get paid to influence people like him.

More recently, when a restaurant in Tyler was concerned about the slow processing of its liquor permit, members of Bonnen’s beer-distributing family sought assistance on its behalf — and soon the Angleton lawmaker’s office asked state regulators what was taking so long.

Now that the bank CEO has risen to one of the highest offices in state government — speaker of the Texas House — his financial ties to lobbyists and the permit "status check"he provided at the request of his wife’s family highlight two potentially fraught areas for the new GOP leader, particularly during a legislative session in which alcohol laws could undergo major revision.

Bonnen told The Texas Tribune he sees no conflicts of interest, no reason to take any formal steps to distance himself from beer or banking issues, and no need to tighten disclosure rules that make it impossible for Texans to know for sure which lobbyists have invested in his Heritage Bank of Pearland — a list that is much larger than what has previously been reported.

“We’re a citizen legislature, and what our constitution and what the people of Texas have wanted for over a hundred years is people to be elected, come to Austin for a short period of time, and live and work under the laws that we pass,” Bonnen said in an interview at the Capitol last week.

But ethics watchdogs say that at a minimum, Bonnen should disclose the full list of lobbyists and Texas lawmakers who invested in Heritage while taking clear steps to distance himself from any legislative issues that could conflict with any personal or family business.

“Texans have a right to know who has the potential to influence legislators,” said Carol Birch, legislative counsel for the liberal watchdog group Public Citizen of Texas. “If the disclosure requirements aren't requiring that type of information, then we’ve got a problem.”

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Bonnen already has instructed his staff to remain “neutral” on alcohol issues this session, when reformers pushing free-market reforms are expected to do battle with wealthy beer distributors who benefit from the status quo. But the new speaker sees no reason to do what his predecessor did on horse-racing issues. Before each session, former GOP Speaker Joe Straus, whose family has horse-racing interests, recused himself in writing from any actions related to expanding gambling at horse tracks.

As a state representative and now as speaker, Bonnen said he sees no problem trying to help any “citizen” facing liquor permit issues — even if that involves R & K Distributors of Longview, the beer distributing company partly owned by his wife, Kimberly Bonnen,(via a trust)and run by her father and brother.

Emails obtained by The Texas Tribune under the Texas Public Information Act show that in 2016, Bonnen’s office stepped in to help a Tyler restaurant, the Aspen Creek Grill, when it was trying to get authority to sell mixed alcoholic beverages (distilled spirits, wine and beer).

Bonnen said his father-in-law, Mike Martin, CEO of R & K Distributors, asked Bonnen's wife if Bonnen could determine whether Aspen Creek Grill's mixed beverages license would "show up sooner [rather] than later.”After Bonnen's office inquired about the status of the permit in a December 2016 email to the Texas Alcoholic Beverage Commission, the agency's government relations director said she had "been pushing" and would "push some more."That day, the TABC issued a "letter of authority" that allowed Aspen Creek Grill to sell alcohol. (A managing partner at the restaurant confirmed that R & K distributes beer to the eatery).

“We’d do it for anyone who asked,” Bonnen said, adding that he and his father-in-law talk about family and sports but don’t discuss beer legislation.

A 2016 email shows discussion with a Texas Alcoholic Beverage Commission government relations manager about the liquor permit for Aspen Creek Grill in Tyler.

In his business life, Bonnen’s focus is not beer but rather the bank he started in 2008, now headquartered in Pearland, just outside Houston. But from the beginning, his private business intersected with his life as a legislator.

In 2008 or 2009 — he can’t remember which — Bonnen says he made an investment presentation forhis new bank to a crowd that included several lobbyists in a meeting at the downtown Austin office of top-tier lobbyist Rusty Kelley. Bonnen said Kelley assembled the meeting, which was one of numerous weekly presentations Bonnen was making to various investors at the time.

“Quite frankly, the lobbyists are damn lucky to have a chance to invest in a great business, and they’re the ones gaining the advantage, not me,” Bonnen said, adding that it was natural to ask them to buy shares because when you need investment capital, “you go to friends and family.”

Asked if he might face criticism that lobbyists felt pressure to invest in the business of a state lawmaker, Bonnen said that might be true “if people think I’m the least ethical person they’ve ever met.”

“I think my reputation is to the opposite,” he said.

State and federal banking disclosures show Kelley owns 3.5 percent of the bank and until recently served on the board of directors. But the identities of the other lobbyist investors are not listed in the banking records.

While Bonnen discloses that he has “business in common with a lobbyist” at Heritage Bank on mandatory state ethics filings, state ethics laws allowhim — and any other Texas lawmaker — to keep secret the names of the lobbyists. In an interview, he declined to say which registered lobbyists have a stake in his bank but noted that no single shareholder owns more than 4 percent of the company’s stock.

House Speaker Dennis Bonnen discloses in state ethics filings that he and at least one registered lobbyist have a common business interest in Heritage Bank. But Texas ethics laws do not require him to name the lobbyists, and he has declined to do so.

“I think you ought to disclose who the hell they are, and you may want to take steps to recuse yourself from any activities involved with it,” said Dave Jones, president of Clean Elections Texas, a nonpartisan group dedicated to campaign finance and ethics reform.

Sources and interviews indicate there are several lobbyists who bought stock in Bonnen’s bank.

Lobbyist Craig Eiland, who bought shares when he was a legislator, was a significant investor but told The Texas Tribune he recently sold some of his shares. Three other lobbyists — Jack Roberts, Mignon McGarry and Gordon Johnson, a former top adviser to Straus — confirmed they invested, too.

Two sources with knowledge of Bonnen’s lobbyist shareholders identified other current and former lobbyists as investors, including Bonnen’s new chief of staff, Gavin Massingill, James Mathis and Sabrina Brown. Brown would neither confirm nor deny she ever invested in Heritage Bank. Mathis did not respond to phone calls or texts.

Massingill, who accompanied Bonnen to the Tribune interview at the Capitol, replied, “I’m not going to answer that,” when asked if he had invested in Heritage Bank. Massingill said he had sold his interest in his old lobby firm, Carriage House Partners LLC.

But Massingill remains partners with two other Carriage House lobbyists, Mathis and James Clark, in the property where Carriage House has its offices just west of the Texas Capitol. Massingill, Clark and Mathis all shared a roof there until mid-November, when Massingill was tapped to become Bonnen's chief of staff.

The Carriage House, which has a private bar that's known as a popular after-hours destination for lawmakers and lobbyists alike, was expanded thanks to a $1.4 million loan from Heritage Bank in 2015. Bonnen said the loan represented .004 percent of his bank’s $241 million loan portfolio and is precisely the type of business he likes to do.

“Community banking is about making loans to relationships you have,” Bonnen said. “We … competed and gave them a good rate."

Lobbyists aren’t Bonnen’s only Capitol friends with a stake in Heritage Bank. Former House Speaker Tom Craddick, R-Midland, who under Bonnen got his first committee chairmanship in years, has a piece of it. So does state Rep. Dan Flynn, R-Canton, who sits on the Heritage Bank board and was tapped by Bonnen to head the Defense and Veterans Affairs panel. Bonnen’s brother, Rep. Greg Bonnen, R-Friendswood, is a major shareholder.

And Rep. Tracy King, D-Batesville, is, as the new speaker put it, a “very, very small shareholder.” Bonnen just appointed Kingto chair the committee that oversees the alcohol industry.

Tribune reporter Shannon Najmabadi contributed to this report.

Disclosure: Rusty Kelley, Jack Roberts, Gavin Massingill and Sabrina Brown have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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